The Australian Securities and Investments Commission (ASIC) yesterday announced Hollard had reacted to concerns raised by the regulator about the marketing of its Real Funeral Expenses Cover.
Specifically, ASIC was concerned that the advertising of the product contained insufficient information about premium increases; inadequate qualifications about price; and, prior to May 2012, prices that were not in line with the images used in advertising.
According to ASIC, Hollard has agreed to prominently disclose that premiums increase with age, and that there are risks associated with the product – including the risk that consumers may pay more over time than the benefit they are entitled to, and that consumers are not entitled to a refund of premiums paid if they choose to cancel.
As a result of ASIC's action, Hollard general manager John Roche yesterday announced that the company had “reduced premiums across most age ranges, particularly for those aged between 70 and 80” and had frozen increases to premiums “once the policyholder reaches 80”.
“On being accepted, policy holders now have the option of a fixed rate or an age-based rate which means they can choose a policy where the premium rate increases with age up to 80, at which stage the rates are frozen or one where the premium rate stays the same for the entire life of the policy,” Mr Roche said.
The news follows an announcement on Monday by TAL-backed company InsuranceLine that it had launched a funeral insurance policy which has level premiums “for life”.
“We heard [from our customers] that level premiums which don’t increase with age and a cap on the amount people pay for cover are important and we’ve made this the norm,” TAL chief executive Jim Minto said.
ASIC commissioned a research report in July 2012 entitled Paying for funerals: How consumers decide to meet the costs, which found consumers have “little depth of understanding of the limitations of funeral insurance policies – the increasing premiums, the total amount spent, the failure to pay clauses, and the real cost of funerals”.
